Shinhan Bank Partially Wins Damages Lawsuit Over Lime Incident... Bankruptcy Claim Set at 146.7 Billion Won

Court Rules Former Vice President Lee Jongpil Liable for 2 Billion Won in Damages

Shinhan Bank will be able to recover a portion of the compensation it paid to investors in connection with the Lime Asset Management fund redemption suspension incident.

The Seoul Southern District Court Civil Division 13 (Presiding Judge Jung Won) ruled in a damages lawsuit filed by Shinhan Bank against Lime and former Lime Vice President Lee Jongpil, confirming Shinhan Bank's bankruptcy claim against Lime at 146,783,361,396 won.

The court ordered that former Vice President Lee is liable to compensate 2 billion won of this amount, and to pay delayed damages calculated at an annual interest rate of 5% from October 27, 2023, to May 16, 2025, and 12% per annum from the following day until full repayment.

Previously, Shinhan Bank claimed that it had paid a total of 183,479,201,745 won to investors in connection with the fund, in the form of provisional payments and private settlements, and sought damages or indemnity from Lime and former Vice President Lee. As a result of the court's ruling, Shinhan Bank will be able to recover approximately 146.7 billion won of this amount.

The court acknowledged that former Vice President Lee, as Lime's chief investment officer, violated his duty of care and duty of loyalty as a prudent manager. The court also found that Lime's conduct?channeling funds into insolvent funds contrary to the investment structure specified in the fund's product proposal and using them to pay redemptions for existing sub-funds?constituted an unlawful act due to unsound management.

However, the court dismissed all claims for damages and indemnity except for the 2 billion won, stating that "the provisional payments and private settlements are not recognized as having a sufficient causal relationship with the defendants' unlawful acts."

The Lime incident refers to the 2019 case in which Lime Asset Management continued to sell funds without disclosing overseas fund insolvency, resulting in the suspension of redemptions. Investors suffered losses totaling approximately 1.6 trillion won. In 2020, Lime's registration as a financial investment business was revoked by financial authorities, and in 2022, the court declared Lime bankrupt.